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CAPE TOWN — At Africa’s biggest mining conference, foreign investors can’t avoid the electricity crisis. The shortage is obvious even in their swish Cape Town hotels, where their rooms are often plunged into darkness from rolling blackouts.
Africa’s traditional mining powers, South Africa and Zambia, are under siege from a range of self-inflicted problems these days. South African miners are plagued by worsening electricity rationing and persistent labour unrest, while Zambia is facing a revolt from foreign mining companies after it tripled its royalty tax rate to 20 per cent last month.
While political leaders from both countries were struggling to soothe jittery investors at the African Mining Indaba this week, many Canadian miners are instead finding their own niches in smaller and more obscure African countries – some of which were considered too unstable or risky for investors until recently.
On Tuesday, senior cabinet ministers from South Africa and Zambia took to the stage at the mining conference to put a positive spin on their trouble-plagued mining sectors. But neither was able to offer much to placate the industry.
South African Mineral Resources Minister Ngoako Ramatlhodi admitted that his country faced “power challenges” – a mild term for electricity shortages that have caused substantial losses for many mining companies. He referred vaguely to the long-term development of nuclear and hydro energy which could take nearly a decade to begin production. He also vowed to arrest and jail the perpetrators of the labour violence that has caused havoc in the mining sector.
Analysts were unimpressed. “The minister has not given any indication as to how the South African government intends on assisting the mining community during the nation’s current electricity crisis,” said Jacques Barradas, a partner in the Johannesburg office of management consultants Grant Thornton.
He said the mining sector was “directly and dramatically” affected by the power blackouts. “If this crisis continues, it will have a serious and possibly irreversible long-term negative impact on the economy and South Africa as a whole.”
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